Madras High Court
The Secretary Of State For India In ... vs Pandit Radhika Prasad Bapuli on 5 October, 1922
Equivalent citations: 74IND. CAS.785
JUDGMENT Walter Schwabe, C.J.
1. The history of this matter is so clearly stated in the judgment of Coutts-Trotter, J., that it is unnecessary for me to repeat it and I have nothing to add to his statement of the facts except as to the plaintiff's title and I will deed with that first.
2. The plaintiff is the assignee of one Mr. Kund Lal who is the direct lineal descendant of Madhu Sahai who, in the year 1845, had issued to him a document called a promissory-note of the Tanjore debt, No. 307. The plaintiff has also obtained from the District Court of Benares a Succession Certificate under the Succession Certificate Act of 1889 in the matter of the estate of Madhu Sahai, declaring him entitled to collect the money and the interest due in the said promissory-note (Exhibit M). The effect of the certificate is that the plaintiff is declared to have whatever rights Madhu Sahai would have had in the promissory-note if he had been alive, and payment to him will be a good discharge to the Government. The assignment to the plaintiff, Exhibit J, was made in 1909 and in my judgment it assigns all the rights that the assignor had as representing Madhu Sahai It is true that it recites that the assignor is entitled to the promissory-note assed to a specified amount of interest Rs. 2,833-15-o½. That is the amount of interest accrued due from the date of the list payment referred to hereafter, up to the time when by Exhibit F. published in the Fort St. George Gazette, it was announced that, as Madhu Sahai had declared that he had not received the promissory-note No. 307, it would be paid on September 30th, 1854, and that the notice would be held equivalent to a tender of payment on that date, from which date all interest on the said note would cease. It has not been contended before us that that notice had any effect. on the rights of Madhu Sahai but apparently the parties to the assignment thought that it had the effect of stopping the interest, as from that date, and that is apparently the meaning of this recital. However, the operative part of the document assigns all the interest in the promissory-note which the assignor had. In the translation before us the words are "right and authority." But we have had before to the Court Interpreters of Hindi and Gujarat and they agree that the words mean literally "the rights and powers," and convey what we understand by such words as "all the right, title and interest" and include particularly all powers of recovering by action, or otherwise, the amount due on the promissory-note. This, in my judgment, is wide enough to cover both principal and all interest due and to become due. It follows that the plaintiff had both by the assignment and by virtue of the Succession Certificate all the rights of the estate of Madhu Sahai.
3. I propose now to consider the rights of the plaintiff apart from the Limitation Act and, then, whether that Act applies. The history of the matter, as fat as we can ascertain it, is that in 1847 one Hur Kissen Doss received through his agent one Pattam Narayanasami Chetti the arrears of interest up to October 30th, 1846 from the date of the agreement of 1824 referred to hereafter, i.e., Rs. 8,411-5-1 (Exhibit I A). The promissory-note itself has a column on the back for acknowledgment of the receipt of interest. The column contains what purports to be an order by Madhu Sahai to pay to Hur Kissen Doss, and it also contains what purports to be a further order signed by Madhu Sahai to pay to one Shri Girdharji Maharaj. This is the best that can be made out of the endorsement on the original some what dilapidated promissory-note, and a copy of this endorsement made by the plaintiff when it first came into his possession some 13 years ago. It is suggested the these endorsements are forgeries, and there is some support for that theory in that in 1853 Madhu Sahai's statement that he had never received the promissory-note is officially accepted as is shown by Exhibit F. But the East India Company paid this interest to Har Kissan Doss in 1844 on what purports to be the direction of Madhu Sahai and, in the absence of evidence that it was not done by his direction, in my judgment, the plaintiff has failed to establish that this amount of interest was not properly paid; and, therefore, in my judgment his claim to the amount fails.
4. At later dates other persons made claims Under the promissory-note bat they were all rejected, one by the High Court made by v. Minnuswami Chetty, as appears from Exhibit G at some date before 1864. In 1892 one Shri Jivan Lalji put in a claim which was rejected.--See Exhibit H. It would appear that Shri Jivan Lalji was the grandson of Shri Girdharji Maharaj who in Exhibit E. is stated to have died in 1842, and Jivan Lalji left surviving him, a widow and two sons, one also called Girdharji Maharaj: See Exhibit K. If Exhibit E, which does not seem to have been proved by any one, is accurate, that Girdharji whose name appears endorsed on the promissory-note, was dead, before the promissory-note was issued in 1845 and it is not surprising that' doubts were thrown in a Exhibit H on the honesty of any claim made through him. At any rate, no payment was made of principal or interest to Girdharji Maharaj or any one claiming tinder him, and the plaintiff has by Exhibit K taken the precaution of obtaining a release-deed from the present representatives of Giridharji Maharaj and in my judgment the supposed endorsement to him can be disregarded. It is not relied upon by the Secretary of State. Where the promissory-note was, until between 1901 and 1906, when it is stated that it came into the hands of the heirs of Madhu Sahai, we do not know. But it was originally issued to Madhu Sahai and was throughout his and his legal representatives property, and I find no assignment of his rights there under, except for the interest dealt with above, until the assignment to the plaintiff. I, therefore, hold that the plaintiff has the full rights that Madhu Sahai would have had, if he were alive now.
5. Those rights, apart from limitation, are to be paid the principal, the requisite notice having been given in 1853 and apparently again in 1858 (See Exhibit G.) and interest at 4 per cent, from October 1846 until the decree herein.
6. It is contended that all rights to the principal and consequently also the interest are barred. It is argued that under Article 120 of the Schedule to the limitation Act of 1908, if under no other Article, the right to recover is barred six years alter the principal debt became payable, i,e., from the date of expiry of the 15 mouths' notice given in 1853 or 1858. There are two answers made to this. First, that time can only begin to run frof1 the, date of demand for payment made at Madras which was not until October 1916, and secondly, that the Government, who it is admitted have succeeded to the rights and liabilities of the East India Company were and are in the position of the trustees, and that, under Section 10 of the Limitation Act, no period of limitation can apply. The learned Judge has found the first point against the plaintiff and the second in his favour. In my judgment the plaintiff is right on both points.
7. The first point turns on the terms of the promissory-note itself. By it, the Company agrees to pay to Madhu Sahai, on the expiration of 15 months' notice of payment, on demand at the General Treasury at Fort St. George, the principal sum, and to pay interest half-yearly as long as the Company was in possession of the revenue of Tanjore. The interest was to be paid at the Treasury in cash to proprietors if resident in India and in cash, or by bills at 12 months date at the option of the proprietors, if resident in Europe., According to the Law of England when money is payable on demand and nothing further is said, it is payable at once and without demand and time under the Statute of Limitations begins to run at once. The most common instances of the application of that principle are of money lent re-payable on demand 0r at request and promissory notes payable on demand: Norton v. Ellam (1837) 2 M. & W. 461 : 1 M. & H. 69 : 6 L.J.(N.S.) Ex. 121 : 1 Jur. 433 : 46 R.R. 646 : 150 E.R. 839. It is worth noticing that this principle of the, English Common Law has been held not to apply to cases in the mofussil: Tarinee Parshad Ghose v. Pran Kishen Banerjee 14 W.R. 224 : 6 B.L.R. 160. However, the principle is in terms applied by Articles 59 and 73 of the Limitation Act to cases of money lent and Bills of Exchange and promissory-notes payable on demand. Bat it is not extended to any other case. Article 73 does not apply to this case as the so-called promissory-note is not a promissory-note within the definition of the Limitation Act. Further, in England the question in such cases is Stated clearly by Scrutton, L.J., in Bradfora Old Bank Limited v. Sutcliffe (1918) 2 K.B. 833 at p. 849 : 24 Com., Cas. 27 : 62 S.J. 753 : 34 T.L.R. 619, are by Bankes and Atkin, L.J., in Joachimsen v. Swiss Bank Corporation (1921) 3 K.B. 110 : 90 L.J.K.B. 973 : 125 L.T. 338 : 26 Bom. Cas. 196 : 65 S.J. 434 : 37 T.L.R. 534 , where it was established that the principle did not apply to cases between customers and bankers. The question to be considered is whether the words, 'on demand' are mere wires or whether, looking at the whole document. it is really intended that the demand should be made before the liability to pay arises. Now in this connection, I attach very great importance to the fact that the payment is to be made at a named place by the person liable, which. place is the address of the debtor and not the creditor. In the case Rowe v. Young (1820) 2 Bligh 391 : 4 E.R. 372 : 21 R.R. 91, it was held that the presentment for payment of a Bill of Exchange payable at a named place was a condition precedent to the right to sue on the Bill. It is true, as pointed out by Coutts-Trotter, J., that that particular rule has since teen altered by Statute, but the principle of the decision is, in my judgment, in no way thereby affected, and I consider it directly in point. Further it is worth observing that there has been no similar statutory alteration of the law in India. Looking at the whole document, in my judgment, it was the intention of the Company to insist on a demand at the place named, for I cannot think that it was in tended that the Company should be under a duty to seek out the creditors and pay them especially as the payment under the promissory-note Was to be to the payees or their order and the Company would not know who they would be at the expiration of 15 months' notice to be given at some future date. Further, as to the interest, the Company would require to know if the proprietor for the time being was in India, in which case in was to be paid in cash at the General Treasury, or in Europe, in which case he had an option, the exercise of which le would have to communicate. In my judgment the Company came under no-liability to pay either the principal or interest until the demand was not made for payment at a particular place and in some cases a particular manner and if the Company had been sued without a demand, it world, in my judgment, have been a good defence to tae action that no demand has been made. It follows, in my judgment, that the rights under the promissory-note, looked upon as a simple contract debt, are not barred
8. Secondly, are the Government trustees within the meaning of Section 10? Following the words of that section, Is the Government a person in whom property has been vested in trust for any specific purpose and is the action for the purpose of following the trust property? A specific purpose is a purpose that is either actually specifically defined in the terms in which the trust is created, or a purpose which from the specified terms can be certainly affirmed. Khaw Sim Tek v. Chuah Hooi Gnoh Neoh (1922) 1 A.C. 120 : 91 L.J.P.C. 36 136 L.T. 203. In this case the terms are to be found in the article of agreement, of 1824 (Exhibit C of which, I think, if this case goes further, Articles 15 and 16 should be printed). It was an agreement between the Company and, amongst others, Madhu Sahai's predecessor-in-title. Ii, my judgment, by the agreement the East India Company undertook to set aside a sufficient put of the Tanjore revenue to be received by it, to provide for the payment to the creditors of Amar Singh, who had signed, the agreement of then debts. Those creditors were to receive transferable bonds or certificates and sufficient revenue was to be set aside and applied to paying the interest on those bonds and also to creating and accumulating a sinking fund for the redemption in due course of the principal, in pursuance of this agreement a transferable bond, called a promissory-note, was issued, as the note states in conformity with and in pursuance of the articles of the agreement of 1824, and is now held by the plaintiff. It is true that by the terms of the document the Company agreed to pay in the events that have happened, the interest and principal due on the bond to Madhu Sahai or his order. He or his assignees could have sued on the promissory-note itself and the Company undertook a liability to pay interest so long as they received the Tan]ore revenue, and principal after 15 months' notice given by them, and it would have been no defence that the Company had not received sufficient revenue or that, after giving the notice, had not got sufficient sinking fund in its hands; but, this does not, in my judgment, prevent the Company from being trustees of the fund that it did get into its hands; that is, of that part of the revenue required for toe purpose of meeting the principal and interest on these bonds. I agree with the judgment of Coutts-Trotter, J., that a trust was created by the articles of agreement and, in my judgment, the Company and the Government and its successors are trustees of the funds in their hands" for the purpose specifically defined in the articles of agreement, namely, the payment of interest and principal of the transferable bonds to be issued under the agreement, of which the bond in suit is one. I therefore hold that Section 10 of the limitation Act applies.
9. The judgment must be reduced by Rs. 8,411-5-1 referred to above. That is, however, a minor part of the' case, but the appellant's case partially succeeded and I think that the justice of the case will be met by awarding to the plaintiff three-fourths of the taxed costs of this appeal. Time for payment three months from today.
Wallace, J.
10. The plaintiff is suing to recover money due on a bond, Exhibit A, dated the 28th July 1845 under which the Governor in Council promised on behalf of the East India Company to pay certain principal and interest due to one Madhu Sahai and his successors-in-title. The said Madhu Sahai represented a creditor of the deposed Raja of Tanjore, Amar Singh, whose debts so far as they had been proved to the satisfaction of the Company under a Commission appointed for the purpose, the Company took ever, and for the due payment of which they made themselves responsible. The manner in which this was done is set but in Exhibit C, dated the nth February 1824, articles of agreement between the Company and those claiming to be the creditors of Amar Singh.
11. A great deal of discussion has centered round this document. On the best consideration that I can give it, the important previsions in it appear to me to mean this: The creditors who put their hands to it agreed to abide by the decision of the Commission appointed to determine the extent of their debts. The Company who were then in possession of the revenues of Tanjore, formerly in the possession of Amar Singh on their part agreed to take over these debts so determined with simple interest on the balance found due at4 per cent, from the date of the debt to the 30th April 1823 to consolidate that sum as the principal of bonds to be issued by them to the creditors in full satisfaction of such debts due by Amar Singh, the bonds to carry simple interest at A per cent, per annum, to be paid half yearly from the 30th April 1823; such interest was payable only so long of the Company retained the revenues of Tanjore, while the payment of principal was not so conditioned, such payment to be made only after 15 months' notice by the Company. In order to provide means for the redemption of these bonds, the total principal of which amounted, we are told, to nearly nine lakhs of rupees, a reserve fund sufficient to pay the interest was to be set apart by the Company out of the Tanjora revenues plus a sum equal to five per cent, of the principal annually out of the same revenues as a sinking fund, to meet the, principal and on this sinking fund, the Company would pay 4 per cent, pet annum to be paid from general revenues. This latter stipulation is important as showing that the Company regarded the sinking fund as a separate fund with then belonging to and for the benefit of others. The sinking fund was to remain in existence and be a charge on the Tarijore revenues until all the bonds were discharged. Article 15 of the deed further stipulates that the deed shall not operate to make the Company's property, apart from the Tanjore revenues, liable for these debts or any other debts owing to these creditors of Amar Singh or to make even the Tanjore revenues liable, unless these are received by the Company at Madras. The elect of this agreement clearly is, I think, that the Company who had come into possession of the Tanjore revenues and recognised the justness of the claims of Amar Singh's creditors on these revenues took on themselves the obligation to pay these debts and constituted themselves trustees, so far as they were and remained in possession of the Tanjore revenues, for the payment of these bonds so issued, and undertook to set apart a sufficient portion of these revenues, as a trust fund to be used for the payment of interest on and the ultimate redemption of, these bonds until all of them were discharged.
12. In pursuance of this agreement bonds, as contemplated, were issued and Exhibit A, the bond, under which the plaintiff sues, is one of them. It is not denied that it is undischarged as regards the principal and most of the interest.
13. The plaintiff's contention is two-fold; firstly, he sues on Exhibit A on the ground that be is entitled to be paid on it from the trust fund maintained ad hoc by the Government and, therefore, his claim cannot be barred, since the Government cannot plead limitation against a trust obligation, end secondly, that, apart from any question, of trust, and even if there is no trust fund, the payment is not barred by limitation. The Government claims that the trust, if created,(and its creation is not strenuously disputed) came to an end when Exhibit A was issued and that Exhibit A is only an ordinary contractual bond between debtor and creditor, where on payment is barred by limitation Exhibit A itself states that it was issued, in pursuance of the agreement, Exhibit C detailed above, and the whole tenor of it shows that this was so. The Advocate General's chief contention is that, in Exhibit C, it was laid down that the amount of principal and interest found by the Commission to be due to any particular creditor of Amar Singh was to be satisfied by the bond to be issued and that that implied that, on the issue of the bond, the trust ultimately ceased. That view I cannot accept. The debt of Amar Singh was indeed to be satisfied, once for all, by the bond, but the agreement went on to make distinct provision for the ultimate satisfaction of the bond itself, by announcing a promise of a sinking fund to be maintained, until the bonds were fully discharged. It is not denied that the sinking fund was maintained and the Government Notifications of the 24th June 1853 Exhibit F, and 18th December 1858 (filed in this Court) indicate that it was so being maintained, and of course Government was bound under Exhibit C, so to maintain it until all the bonds were discharged, Government has been, since the date of Exhibit C, in possession of the Tanjore revenues and I must presume that it has carried out the promise contained in that document.
14. So then we have the position fari pasu with the issue of and running of the bonds, the sinking fund to pay them on was being accumulated, until, by 1858, all except four bonds, of which Exhibit A was one, had been paid off, and that in 1858 Government had sufficient sinking fund to clear these also. It is plain, then, that Government had been all along holding in trust for the bond holders the amount necessary to pay oft each bond. The trust had in fact not ceased by the issue of the bonds but continued and was to continue according to the agreement so long as any obligation to pay remained on any bond, and the trust fund could be dissolved only when every bond was discharged. Exhibit A has not been; discharged. The trustee must, therefore, meet it from the trust and so far as that fund is sufficient to meet it and he cannot be heard to plead that he is not bound to do so, or that the payment is barfed by time, and thus in effect appropriate to himself the trust fund. To this part of tie case no defence can be put forward against payment other than one of two pleas; (1) that such a loss in the Tanjore revenues has taken place that the trust fund was exhausted so that the bonds cannot he redeemed from it; or (2) that all the bonds have been discharged, Neither plea has been here advanced.
15. Another argument to show that the trust came to on end with the issue of the bond is based on the wording of Exhibit A itself. Exhibit A no doubt does not mention any sinking fund or re-produce Article 15 of Exhibit C which makes only the Tanjore revenues liable for the debt. So far as its wording goes, the Governor-in-Council is prepared to meet the obligation to pay the principal end interest from general revenues. Interest, no doubt, would not be payable if the Company had wholly lost the Tanjore revenues, but apparently tie obligation to pay from general revenues, would continue even if the Tanjore revenues while not wholly lost, nevertheless proved insufficient to meet the bond. Incidentally, this shows that Exhibit A was something more than a mere warrant or-declaration of intention to carry out Exhibit C, or a moralize to indicate to the holder of Exhibit A what his share in the trust fund was.
16. But, apart from that, the pre sent question is, was the original trust obligation charged on Tanjore revenue then converted, when Exhibit A was issued, into an ordinary-contractual obligation to pay from general revenues so that the trust obligation had come torn end? lean find no ground for such a conclusion. The wording of Exhibit A so far from indicating any novation from the agreement, Exhibit C, directly purported, to be in pursuance of Exhibit C. The probable explanation of the use of language in Exhibit A loose, enough to make the Company's general revenues liable for the bond, is that the risk of the Company losing the Tanjore revenues, which was a real risk in 1824 bad by 1845 become negligible, and it became a matter of indifference to the Company whether the bond was redeemed from the trust fund fed by the Tanjore revenues, or from general revenues, while beyond that Government always had the safeguard that, interest was not payable, if the Tanjore revenues were lost while principal was not payable until Government chose to give notice. Had there been any real risk at the time of the, issue of the bond of 1845 it is obvious that the full terms of the agreement in Exhibit C would have been strictly set out in Exhibits, and that a bono professedly issued in pursuance of that agreement should have, if it had been at all necessary, limited the liability of the Company to a charge on the Tanjore revenues as set out in Exhibit C. There is nothing in the wording of Exhibit A, then to indicate that Exhibit C was not being carried out, that the trust fund was not in being, or that there was any fresh agreement at the time of Exhibit A which put ah end to that trust. In fact, its wording implies that the trust set out in Exhibit Chad been accepted a no was being carried out thereby.
17. My conclusion on this part of the case then is this; there is and ought to be a trust fund in existence for the payment of the a mount due under this bond. Government cannot be heard to say, nor is it in fact pleaded, that they have broken that trust or have not maintained the fund. The plaintiff, assuming that he is the real beneficiary under the bono, is entitled to enforce his claim under Exhibit A, as if he were as he is, one of the beneficiaries under this trust, and if there is sufficient money in the fund to discharge what is due on this bond, the money due under it must be paid and payment of it cannot he barred by limitation, since a trustee cannot be allowed to vouch a Statute of Limitation against a breach of trust, and the present suit is clearly case for the purpose of following, i.e., for recovering for the cestui que trust, in the hands of Government trust property vested in it for a purpose specific and specified in this case by the author of the trust. So far as the trust fund will discharge Exhibit A. it must do so, but if, and so far as, the trust fund is insufficient to discharge Exhibit A and, therefore, the obligation to discharge it falls on the ordinary revenues, Exhibits is enforceable against these general revenues, only as an ordinary contract between a debtor and a creditor. It might, in certain circumstances, therefore, have been necessary to inquire how far the trust fund will suffice to meet Exhibit' A, but, fortunately, in the present case it is not necessary, for two reasons, first, Government has not pleaded that the trust fund is insufficient to meet Exhibit A and, secondly, I hold in agreement with the learned Chief Justice, that even as an ordinary contract Exhibit A is enforceable in plaintiff's favour.
18. Turning to the second part of the case viz., whether, apart from any trust, payment under the bond is barred by limitation, I agree with, and have very little to add to, what the learned Chief Justice has said, As to the question of the meaning of the phrase on demand at a particular place, I would note the significance of the general Notification of 1858 filed in this Court, which, after giving the necessary 15 months' notice, announced that, on presentation of the notes to the Accountant General at Fort. St. George" a certificate for payment both of principal and interest would be issued. It is clear then that before Government became liable to pay on the notes, whether principal or interest, that is, before any of the debt became due, there was to be a specific demand, accompanied by presentation of the note at the accountant-General's Office at Fort St. George.
19. I have nothing to add to what the learned Chief Justice has said regarding what plaintiff has acquired under the assignment and, Exhibit J, except that I do not think it necessary to consider the scope of Exhibit M, or to decide whether it is co-extensive with Exhibit J or not. Personally, I think it is limited to the sums named in it, but it is not a point to importance at present.
20. As to the disallowance of Rs. 8,411-5-1, plaintiff clearly has no right to that sum. The assignor believing, no doubt, that under the Notification of 1853, Exhibit F, interest ceased from 30th September 1854 calculated the interest due to him up to that date from 30th October 1846, the date up to which, according to the endorsement of the note, Exhibit A, interest had been, paid by Government to Hari Kissen Doss, ascribed in Exhibit A, as the general attorney of Madhu Sahar, the original holder, and Rs. 2,833-15-o½ represents that sum. The plaintiff has shown no reason for us to suppose that sum was not paid to the holder's attorney and the Government books, Exhibit 1(a) show that it was so paid. The plaintiff's assignor claiming from Madhu Sahai and, therefore, the plaintiff himself could have no right to have this sum paid over again; and the plaintiff's assignor evidently was quite aware of this, and, therefore, refrained from assigning that sum over to the plaintiff.
21. I, therefore, agree in the order proposed by the learned Chief Justice.